The statistics are not pleasant - four out of five businesses that are started in the UK fail. With the current economy in a tailspin, friends and family may think that you are taking a terrible risk by planning to start a new business. However, your venture does not have to be as dangerous if you take the necessary steps to secure financing for your business.
Planning for Your Business Financing
Many start-up businesses expand too quickly, causing them to fail within the first few years of establishing the business. Evaluate the real needs for your business. Do you need a large staff or can you start with a couple of key employees? Do you need an office building or can you work out of your home for now until you establish yourself in the industry? Do you need to sell multiple products or can you begin with selling just one to generate some revenue? Establish a budget for the amount of money you will need for your business. Make an itemised list and how many pounds you estimate for each item. Consult a mentor or trusted professional in the business to determine if your monetary figures are correct. Do not overextend yourself by borrowing too much money at a high interest rate that you cannot afford. However, many businesses have cash flow problems. As soon as possible, keep reserves for slow times in your business. Trim unnecessary expenses from your budget to help maintain cash flow. Acquiring an open line of credit may also provide you with the cash that you need to take advantage of a business opportunity when your cash flow is low.
Acquiring Business Financing
There are many sources that you can tap for business financing. If you start small, you may be able to save the money yourself. The advantage of this opportunity is that you do not have to pay to borrow, such as paying the interest rate that accompanies a loan or credit card. Stash away a percentage of your income each month and add any unexpected savings, such as tax returns or an inheritance. Governmental grants may also be available to provide you with much needed capital for the establishment of your business. Charitable organisations may provide you with some funds if you meet certain requirements. An investor may be willing to take on a large portion of the risk if he gets a certain amount of the business profit. Consult a bank or a credit union for a loan to begin your business.
Pitfalls to Avoid
There are a few things that you should avoid when trying to secure financing for your business. Do not attempt to get financing when your personal credit is in a bad place. Take the year or so that it will take to clean up your credit report. This can save you money in the long run by making you eligible for better interest rates. Also, do not get discouraged if a bank refuses to offer you financing or gives you an unsatisfactory interest rate. Check with multiple lenders because each organisation will have its own criteria for analysing potential loans and lines of credit. You can acquire financing to start your business and slowly make it grow.
Get cash for your new UK business with a small business loan from Boost Capital.